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Federal government suspects airlines worked together on fares

On behalf of Shulman Hodges & Bastian LLP posted in Business Litigation on Friday, July 10, 2015.

With fuel prices down significantly over the past year, many consumers wonder why the prices of airline tickets haven’t come down as well. The federal government is also curious, and the U.S. Department of Justice has launched an investigation into possible collusion between the country’s major airlines.

For those unfamiliar with collusion, it is when a group of business owners or industry heavyweights work in concert to deliberately fix prices. This may include limiting inventory (in this case, seats on planes) in order to drive up demand, and eventually prices. This may be done during popular holiday weekends, such as the Fourth of July or Thanksgiving; or during a popular travel time for a particular region, such as in February in the northeast.

Against this backdrop, the federal government may have a formidable burden in proving that airlines worked together to drive up fares. This is a stark contrast compared to when the government first deregulated airline routes and fares nearly 30 years ago. When the price of jet fuel dropped, an airline would pounce on the opportunity to add routes or extra flights at discounted rates to draw customers. This would cause other carriers to follow suit, which would ultimately benefit consumers.

With fewer carriers nowadays (nearly 80 percent of all air travel is undertaken by four major carriers) consumers may not get the benefit of the bargain.

Nevertheless, the airline industry is not the only one that could be subject to collusion. If your company is among others accused of it, an experienced attorney can advise you.

Shulman Hodges & Bastian LLP represents clients in Orange County and throughout California, including Irvine, Riverside, Los Angeles, Anaheim, San Bernardino, Ontario, San Diego, Santa Barbara, San Francisco, Riverside County, San Bernardino County, Los Angeles County, San Diego County, Southern California and the Inland Empire.